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Monthly Journal - Vol.: X Issue No. 4 ` 1/- April, 2012v v v

Newsletter CommitteeNewsletter Committee

Of Change, Change management and opportunities

Dear Members:

" Change is the only constant".- Heraclitus, Greek philosopher

What was true more than 2,000 years ago is just astrue today. We live in a world where "business asusual" is change. New initiatives, project-basedworking, technology improvements, staying aheadof the competition - these things come together todrive ongoing changes to the way we work.

Change in the attitude, change in our thinking,changing situations and changing dynamics. Changeis integral part of life and we need to survive, growalong with change.

Yes, fear of unknown is natural, however we need toalways look at the opportunities that changerepresents. To gear up for change we need keepchallenging, keep renewing, and reinventing ourself.

This is true both on personal and professionalperspectives.

CHANGE-PROFESSIONAL PERSPECTIVE

From professional perspective regulators, legislature,industries, clients go thru various dynamics andforces us to encounter newer challenges whichchanges brings to us .We need to constantly gear up

and strategize for change management and thinkdifferently and re-skill our self. As Companysecretaries the changing regulatory arena gives usnewer and greater opportunities to venture in tonewer vistas Let us diversify and grab theopportunities and keep moving our professiontowards achieving the Vision.

CONTINUOUS LEARNING

Learning, unlearning, re-learning is part of thecontinuous learning process and we have to beupdated with the current trends. We need uniqueskill sets and technical competencies so that we gearup for the change management for the challengesand grab the opportunities as rightly pointed out byCS Nesar Ahmed, President The ICSI and CS AnanthSubramanian, Vice President during their visit toHyderabad on March 3-4, 2012.

As part of learning journey In March we organizedprograms on ICSI Vision 2020, Direct taxes, Servicetax, General liability insurance, Revised Schedule VI,Cost Accounting Record rules, Company Auditreport order and Intellectual property rights. Wehave organized the programs on diverse subjects andwe will continue to organize programmes on diverseand unique topics.

I am also happy to announce that SecunderabadStudy Circle an initiative of Sri P.Chiranjeevulu ,Immediate Past Chairman,is now approved by theICSI Headquarters and very soon you will getupdates on learning and other activities.

We need your support, suggestions, and topics,speakers, program formats you specifically want to

CS R. Ramakrishna Gupta CS R. Venkata Ramana CS N Anjaneyulu CS Ritesh Heda CS Champak Kesari Burma CS S. Nihita Nagajayanthi CS Rahul Jain

Hyderabad Chapter

April, 2012 Newsletter

re-commend and please provide constant feedbackas we endeavor to enhance the quality of learningexperience. We are announcing Annual participationscheme which is effective from April 1, 2012 to March31, 2013 and request you to enroll and benefit withthis scheme and enjoy the continuous learningprocess.

CAREER AWARENESS

Students are the life-blood for the Institute andattracting bright talent to the profession is the need ofthe day. I had an opportunity to participate in a liveTV education based program at HMTV and had anopportunity to interact with prospective studentsand their parents and received numerous follow-upcalls. And it re-enforced our belief the strong need ofa very wide awareness regarding CS Coursespecifically in the Districts and rural areas. We willcontinue to propagate the same thru a strong media strategy and earnestly request you to connect us tomedia contacts you may have.

We are launching a specific initiative called "CSCareer Ambassador" inviting nominations to be part of the noble initiative of spreading the profession andevangelizing the same and giving back to professionand contribute to society.

We are thankful to all the members who responded tomy appeals and providing support, encouragementand inputs you are providing to our team and also forcoming out voluntarily to support the Chapteractivities. For those of you have not yet respondedback I continue to eagerly wait for your email.

I always get excited and enjoy hearing back from youand your messages do make a difference. Drop me aline with your comment/suggestions.

Sincerely Yours

[email protected]: 9866321639

CS Shujath Bin Ali

Help Desk @ Hyderabad Chapter - ICSI040 23399541, [email protected]

We are looking out for Career Ambassadors who can evangelize and take the CS course to the students and attractBright Talent. This is great opportunity if you are interested to give back to the profession, Institute and helpstudents in your free time. You can proudly represent the Profession and also give back to society including yourown old school, college, institution and provide value.

What you will get

Happiness

Joy

Satisfaction

Sense of Pride

Proud pin titled "CS Career Ambassador"

Recognition at appropriate forums & more

m

m

m

m

m

m

We will organize a Train the Trainer programme and provide specific orientation and training to equip you with thefacilities and material needed for organizing career awareness programmes.

Write us to [email protected] expressing your interest to be part of this unique team.

We are looking out for Career Ambassadors who can evangelize and take the CS course to the students and attractBright Talent. This is great opportunity if you are interested to give back to the profession, Institute and helpstudents in your free time. You can proudly represent the Profession and also give back to society including yourown old school, college, institution and provide value.

What you will get

We will organize a Train the Trainer programme and provide specific orientation and training to equip you with thefacilities and material needed for organizing career awareness programmes.

m

m

m

m

m

m

Happiness

Joy

Satisfaction

Sense of Pride

Proud pin titled "CS Career Ambassador"

Recognition at appropriate forums & more

Write us to [email protected] expressing your interest to be part of this unique team.

CS CAREER AMBASSADOR

The Editorial Team

(1) CS A Visweswara Rao, Member, SIRC, (2) CS Tekalkote Anil Kumar & (3) CS JV Krishna

Hyderabad Chapter

Hyderabad ChapterHyderabad Chapter

April, 2012April, 2012 NewsletterNewsletter3

By K P C Rao., LLB., FCMA., FCSPracticing Company Secretary

[email protected]

WHAT IS NEW IN THE BUDGET 2012-13?

BACKGROUND

The Union Budget of India, referred to as the AnnualFinancial Statement in Article 112 (Part V, Chapter II)of the Constitution of India, is the Annual Budget ofthe Republic of India, presented each year on the lastworking day of February by the Finance Minister ofIndia in Parliament. The budget has to be passed byboth the Houses of Parliament before it can come intoeffect on April 1, the start of the financial year. Thebudget session has started this time on March 12 and the Union Budget 2012-13 has been delayed this timebecause of elections in five states and presented onMarch 16, 2012. While the Rail Budget was presented

on March 14, the Economic Survey outliningGovernment's assessment of the economy was tabledon March 15, 2012.

The budget papers tabled in Parliament containbroadly, the budget speech, a breakdown of thedetailed spending proposals of each ministry, as well as revenue raising proposals.

How is government expenditure classified in thebudget?

There are two different sets of classifications used inthe Budget are - Plan versus Non-plan and Capitalversus Revenue expenditure.

Plan Expenditure

Capital Expenditure

Expenditure on schemes and projects covered by thefive-year Plans. Such plans are developed by thePlanning Commission after consulting individualministries. Each Plan specifies programmes thatministries will fund and develop over the next fiveyears. Plan expenditure can have both revenue andcapital components.

Expenditure used to create assets or to reduceliabilities.

Non-plan expenditure

Revenue Expenditure

Ongoing expenditure by the government notcovered by the Plans. These include interestpayments on government debt, expenditure onorgans of the state such as the judiciary and thepolice and even expenditure on the maintenance ofexisting government establishments such as schoolsand hospitals. Non-plan expenditure too, hasrevenue and capital components.

Expenditure not used to create assets e.g. expenseson salaries or other administrative costs.

The excess of total government expenditure over total receipts is called the fiscal deficit and is funded byborrowing. The difference between revenue receipts and revenue expenditure is called the revenue deficit.

ARTICLES



THE ECONOMY

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The Union Budget 2012-13 identifies five

objectives relating to growth, investment,

supply bottlenecks, governance, and

removing malnutrition to be addressed

effectively in the ensuing fiscal year. It is a status

quo budget rather than a reformist budget.

GDP growth to be 7.6 per cent (+ 0.25 percent)

during 2012-13.

Gross Tax Receipts est imated at Rs.

10,77,612crore.

Net Tax to Centre estimated at Rs.. 7,71,071crore.

Non-tax Revenue Receipts estimated at Rs.

1,64,614crore.

Non-debt Capital Receipts estimated at Rs.

41,650 crore.

Temporary arrangement to use disinvestment

proceeds for capital expenditure in social sector

schemes extended for one more year.

Total expenditure for 2012-13 budgeted at Rs.

14,90,925crore.

1Amendment to the FRBM Act proposed as part

of Finance Bill. New concepts of “Effective

Revenue Deficit” and “Medium Term

Expenditure Framework” introduced.

Central subsidies to be kept under 2 per cent of

GDP; to be further brought down to 1.75 per

cent of GDP over the next 3 years.

2Investment in 12th Plan in infrastructure to go

up to Rs. 50,00,000crore; half of this is expected

from private sector.

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White Paper on Black Money to be laid in the

current session of Parliament. Tax proposals

mark progress in the direction of movement

towards DTC and GST

Total expenditure budgeted at Rs. 14,90,925

crore; plan expenditure at Rs. 5,21,025 crore – 18

per cent higher than 2011-12 budget; non plan

expenditure at Rs. 9,69,900 crore

Fiscal deficit targeted at 5.1 per cent of GDP, as

against 5.9 per cent in revised estimates for

2011-12

Central Government debt at 45.5 per cent of

GDP as compared to Thirteenth Finance

Commission target of 50.5 per cent

Medium-term Expenditure Framework

Statement to be introduced; will set forth 3-year

rolling target for expenditure indicators.

Current account deficit is likely to be at 3.6%.

Net market borrowing required to finance the

deficit to be Rs. 4.79 lakh crore in 2012 -13.

Effective Revenue Deficit to be 1.8 per cent of

GDP in 2012-13.

Official amendment to “The Pension Fund

Regulatory and Development Authority Bill,

2011”, “The Banking Laws (Amendment) Bill,

2011” and “The Insurance Law (Amendment)

Bill, 2008” to be moved in the Budget session

itself.

Defence services get Rs. 1,93,407crore.

No change in corporate taxes.

SIGNIFICANT FEATURES OF THE BUDGET

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1. The Fiscal Responsibility and Budget Management Act, 2003 (notified in July 2004) envisaged an annual 0.3 percentage point reduction in the fiscal deficit and a 0.5 percentage point reduction in the revenue deficit to bring the former down to 3% of GDP and the latter to nil by 2008-09. In reality, the fiscal deficit doubled to 6% of GDP during 2008-09, driven largely by the desire to distribute largesse on the eve of the 2009 general elections, and remains close to 5%. Meanwhile, the revenue deficit is nowhere near being eliminated

2. Expenditure on schemes and projects covered by the five-year Plans. Such plans are developed by the Planning Commission after consulting individual ministries. The current Plan is the twelfth, and runs from 2012 to 2017.



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a) Anti-Avoidance Measures

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b) Measures to prevent generation and use of

unaccounted money

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Service tax rate raised from 10 per cent to 12 per

cent.

Excise duty raised from 10 to 12 per cent.

External commercial borrowing of up to $1

billion permitted for airline sector.

Completion of highway projects 44 per cent

higher than in previous fiscal.

General Anti-Avoidance Rules (GAAR)

proposed to be introduced in the Income tax

Act, 1961 to check aggressive tax planning.

Earlier, the Direct Taxes Code Bill, 2010 had

proposed to introduce GAAR.

Transfer pricing provisions proposed to be

introduced in respect of specified domestic

transactions exceeding the prescribed

threshold.

Clarifications in sections 9 and 195 in the

context of judicial decisions to tax gains from

off-shore transactions where the underlying

assets are located in India.

Introduction of compulsory reporting

requirement in case of assets held abroad by

residents.

Tax Residency Certificate to be submitted by

the tax payer in case he wants to claim the

benefit of DTAAs under section 90 or 90A. This

is a necessary condition but not sufficient for

availing the benefits of the DTAA.

Additional onus on closely held companies to

explain the source of sum credited as share

capital and share premium in their accounts in

DIRECT TAX PROPOSALS

the hands of the resident shareholder.

Otherwise, provisions of section 68 would be

attracted in the hands of the company.

The consideration received in excess of fair

market value of shares to be treated as income

of a closely held company, where consideration

received for issue of shares exceeds the face

value of shares.

Unexplained money, investment, cash credits

to be taxed at the maximum marginal rate of

30%, without allowing basic exemption or

allowance for expenditure.

Tax to be collected at source by the seller in

respect of sale of jewellery in cash, where the

value exceeds Rs. 2 lakh, irrespective of its

ultimate use, and in respect of sale of minerals,

namely, coal, iron ore and lignite, to be used for

trading purposes.

Resident having any asset outside India

(including financial interest in any entity) to file

return of income compulsorily, even if he does

not have taxable income.

Extended period of 16 years for reassessment,

in respect of persons whose income in relation

to such assets located outside India has escaped

assessment.

Undisclosed income found during the course

of search and admitted at the stage of search

will attract penalty of 10% and if admitted at

the stage of filing return, will attract penalty @

20%. In other cases, penalty would range

between 30% to 90% of undisclosed income.

Prosecution mechanism strengthened by

providing for constitution of special courts,

application of summons trial for offences and

provisions for appointment of public

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prosecutors.

Introduction of Advance Pricing Agreements

for determining arm's length price of

international transactions.

Transfer Pricing Officer empowered to examine

international transactions not reported by the

assessee.

Transfer Pricing regulations to apply to specific

transactions entered into by domestic related

parties where the aggregate amount of such

transactions exceed the monetary threshold of

Rs. 5 crores during the year.

Due date for filing return of income in case of

non corporate payers who are required to file

transfer pricing report under 92E also extended

to 30th November of the assessment year. Due

date for filing tax audit report in all such cases,

both corporate and non corporate, is also 30th

November of the assessment year.

Definition of international transaction further

amplified to clarify the scope of "intangible

property" included therein and to include

business restructuring or reorganisation,

entered into by an enterprise with an associated

enterprise, whether or not it has a bearing on

the profits, income, losses or assets of such

enterprises at the time of the transaction or at

any future date.

Amendments relating to DRP like appeal

against its directions and its power to enhance

variations are proposed to be incorporated.

Alternate Minimum Tax (AMT) levy extended to

all persons other than companies, claiming

c) Transfer Pricing Provisions

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d) Business Taxation

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profit linked deduction. However, if the

adjusted total income does not exceed Rs. 20

lakh for individuals, HUFs, AOPs, BOIs and

Artificial Juridical Persons, the provisions for

levy of AMT would not be applicable.

The turnover limit for compulsory tax audit of

accounts as well as for presumptive taxation

proposed to be raised from Rs. 60 lakhs to Rs. 1

crore.

Expenditure on agricultural extension project

and expenditure on skill development project

to qualify for weighted deduction @ 150%.

Scope of definition of "specified business" to

qualify for investment-linked tax deduction

expanded to include setting up and operating

an inland container depot or a container freight

station, beekeeping and warehousing facility

for storage of sugar.

Provision of weighted investment-linked tax

deduction for certain specified businesses like

setting up and operating a cold chain facility, a

warehousing facility for storage of agricultural

produce, etc.

Extension of sunset date for tax holiday for

power sector by one more year.

Benefit of initial depreciation @ 20% of actual

cost of new machinery or plant acquired and

installed in the year extended to power sector

undertakings.

Weighted deduction for in-house scientific

research and development extended for a

further period of five years.

Disallowance under section 40(a)(ia) for non-

deduction tax at source in respect of certain

payments not to be attracted where the assessee

is not deemed to be an assessee in default under

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section 201(1) on account of payment of the

taxes by the payee.

Daily tonnage income of Shipping Companies

calculated on presumptive basis proposed to be

increased.

Net profit as per the relevant statute to be

considered for computing book profit for levy

of Minimum Alternate Tax in case of Banking,

Insurance companies etc which do not maintain

accounts as per Schedule VI of the Companies

Act, 1956. Further, reference to Part III is

proposed to be removed since Revised

Schedule VI does not contain Part III.

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e) Personal taxation

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Personal income-tax rates rationalized. Basic

exemption limit to be increased to Rs. 2 lakhs for

both women and men, thereby removing

gender discrimination. 30% rate to be attracted

in respect of income over Rs. 10 lakhs.

Deduction of up to Rs. 10,000 for interest on

savings bank account.

Additional deduction of uptoRs. 5,000 for

preventive health check-up.

Senior citizens not having business income to be

exempted from payment of advance tax.

New Tax Slabs

Category Limits Tax rates

I Individual (other than II and III) and HUF Up to Rs. 2 lakhRs. 2 lakh - Rs. 5 lakh 10%Rs. 5 lakh - Rs. 10 lakh 20%Above Rs. 10 lakh 30%

II Senior Citizens between 60 and 80 years of age UptoRs. 2.50 lakh NILRs. 2.5 lakh to Rs. 5 lakh 10%Rs. 5 lakh to Rs. 10 lakh 20%Above Rs. 10 lakh 30%

III Very Senior Citizens above 80 years UptoRs. 5 lakh NILRs. 5 lakh to Rs. 10 lakh 20%Above Rs. 10 lakh 30%

NIL

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f) Capital Gains

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Age of senior citizen for availing higher

deduction for medical insurance premium,

medical treatment of a specified disease or

ailment, etc. aligned with the reduced age of 60

years for availing higher basic exemption limit.

Capital gains tax on sale of residential property

to be exempt if the sale consideration is used for

subscription in equity of a manufacturing SME

company for purchase of new plant and

machinery.

Reduction in STT rate for delivery based

purchase and sale of equity shares and units of

equity oriented fund by 20%.

Benefit of exemption under section 54B in

respect of transfer of agricultural land and

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purchase of new agricultural land extended to

HUFs also.

TDS @ 1% on transfer of certain immovable

properties (other than agricultural land) if

consideration exceeds specified threshold.

TDS @ 10% on remuneration to a director,

which is not in nature of salary.

Threshold for TDS on compensation or

consideration for compulsory acquisition to be

increased from Rs. 1 lakh to Rs. 2 lakhs.

Threshold for TDS on payment of interest on

debentures increased from Rs. 2,500 to Rs. 5,000

and this limit would be applicable in respect of

interest on unlisted debentures also.

Interest paid by specified company to non-

resident in respect of borrowing made in

foreign currency from sources outside India to

be subject to concessional rate of 5%.

Concessional rate of taxation @ 15% of gross

dividends received by an Indian company from

specified foreign company to be extended in

respect of dividend received in F.Y. 2012-13 also.

Cascading effect of dividend distribution tax

(DDT) under section 115-O removed in multi-

tier corporate structure also.

Service Tax rate increased from 10% to 12%,

with corresponding changes in rates for

individual services

Revision Application Authority and Settlement

Commission being introduced in Service Tax for

g) Provisions for deduction of tax at source

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h) Tax Exemptions and Benefits

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Service Tax

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INDIRECT TAXES

dispute resolution and introduction of new

scheme announced for simplification of

refunds.

All services to be taxed except those in negative

list

Standard Rate of excise duty raised from 10 per

cent to 12 per cent; Merit Rate from 5 per cent to

6 per cent and Lower Merit Rate from 1 per cent

to 2 per cent with few exemptions.

Excise duty on processed food brought down to

6%

Excise duty on hand made and semi

mechanized matches reduced from 10% to 6%.

Customs duty on import of parts of aircraft,

tyres and testing equipment fully exempted.

Full exemption from basic customs duty for

equipment for road and highway construction.

Titanium dioxide customs duty cut to 7.5% from

10%

Full exemption from basic customs duty on

natural gas, LNG, uranium for generation of

electricity for two years.

Automated shuttle looms exempted from

customs duty

Full exemption on imported equipments for

road construction projects

Import of equipment for fertilizer plants fully

exempted from customs duty for three years

Excise duty on large cars raised from 22 per cent

to 24 per cent

Most luxury items, eating out, air travel, leisure

activities to cost more

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Excise Duty

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PROBABLE IMPACT ON CONSUMER

What Goes Up

ACs Gold Jewellery Refrigerator Luxurycars Air travel Telephone bills Sport UtilityVehicles Cigarettes Handrolled beedis

Platinum jewellery Diamond jewelleryEmerald Ruby Branded retail garmentsEating out at restaurants Hotel

accommodation Hiring a law firm ToiletriesCosmetics Soft-drinks Steel Cement

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What Goes Down

Cinema and films LCDs and LEDs Importedbicycles Housing society charges LPG

Mobile phones School education Iron oreequipment Medicines for treating cancer andHIV Processed food Iodised salt Match boxes

Soya products Solar power lamps LEDbulbs Natural gas Uranium for generation ofelectricity Desktops/Laptops

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Conclusion:

The Union budget for 2012-13 seeks to address two

primary concerns - the economic slowdown and the

unsatisfactory state of government finances

Undoubtedly, the fiscal space for stimulating growth,

either by way of tax concessions or increased public

expenditure, has shrunk. Last year, global factors -

such as the 'eurozone crisis' - and high inflation in

India constrained economic growth. The economy

which had grown at a relatively fast rate of 8.4 per cent

in each of the two preceding years is expected to clock

just 6.9 per cent during the current year, a rate of

growth which, however, is still high by contemporary

global standards. Drawing inspiration from the

Economic Survey, Finance Minister expects growth to

be around 7.6 per cent in 2012-13, moving one

percentage point higher the following year.

On the tax front, the Finance Minister takes more from

the taxpayer than what he has given. The increase in

basic exemption limit on personal income tax, though

small, is still welcome. Yet the relief is undone by the

increase in service tax and excise duty. The abolition of

duty on coal imports by power plants for two years is a

welcome measure that will provide relief to power

companies that have been hit by higher prices due to

policy changes in the coal-exporting nations.

Allowing power companies and airlines to use

external commercial borrowings (ECB) to finance a

part of their rupee debt and working capital

respectively will help these sectors get back on track.

The decision to increase duties on gold is an

interesting one that is aimed at curbing the rising

import of the yellow metal which is pushing up the

current account deficit. Import of gold and other

precious metals has risen by 50 per cent in the first

three quarters of this fiscal. The move is obviously to

channelise the public money into productive

investment avenues that will help the economy. Gold

is an idle investment that has no multiplier effect.

A similar objective can be seen in the reduction in the

securities transaction tax from 0.125 per cent to 0.1 per

cent for cash delivery transactions on the stock

market. The Finance Minister also signified his

intention to introduce the General Anti Avoidance

Rules as a counter to tax avoidance schemes and

proposed amendment to Section 9 of the Income Tax

Act, allowing the government to reopen controversial

transactions like the sale of Hutch to Vodafone.

Plugging a loophole that allows companies to avoid

capital gains tax is a good thing, even though the

courts will likely have the final word given the

amendment's retrospective effect . The days ahead

will show if this will be the single biggest act of what

was largely a dour budget.


April, 2012 Newsletter10

TulsiAgarwal Company Secretary

Basai Steels and Power Private Limited Email: [email protected]

"Literature was formerly an art and finance a trade, today it is the reverse."

PROLOGUE

GENESIS OF CDR

Considering the present economy, it is very pertinent we

often come to know about companies going for

Corporate Debt Restructuring (CDR), but like any other

news, we give very little importance unless it directly

effects our present business environment. Corporate

Debt restructuring refers to reorganizing of a company's

outstanding obligations. Restructuring often arises

when a company is going through financial hardship

and finds it difficult to meet the obligations.

Following the suite in UK, Thailand, Korea, Malaysia,

etc. of putting in place an institutional mechanism for

restructuring of corporate debt, the Reserve Bank of

India has laid the scheme of Corporate Restructuring in

the year 2001, with an objective to ensure timely and

transparent restructuring mechanism of viable

corporate entities in India.

When companies are faced with financial turmoil, they

may consider a number of options to achieve

restructuring or liquidity which includes merger or

amalgamation, restructuring as per the law of the land,

etc. Despite the best efforts made by corporates, they

find themselves in a financial crunch, reason being

factors not internally controllable. Every financial

institution utmost priority is the security of the funds

that is lend to the corporate

CDR is a structured scheme drawn by Reserve Bank of

India, for companies to align the bank finance in case of

multiple banking exposures and syndication /

consortium accounts and provide timely assistance to

the corporates before it becomes difficult to get the

recovery.

The CDR system in our country has a three tier structure:

1. CDR Standing Forum: The standing forum is a

body consisting representatives from the banks

and financial institutions. It will lay down the

terms and conditions, guides and monitor the

progress of CDR. The CDR Standing forum shall

consist of Chairman & Managing Director from

various banks and financial institutions.

2. CDR Empowered Group: This group will consider

the restructuring request, consider the

preliminary report and submits the same to CDR

cell. Its main role is to examine the viability and

rehabilitation potential of the Company and

approve the same within 90 days. The decisions of

the CDR empowered group shall be final. An exit

option can be availed by the creditor prior to the

commitment by the Empowered group i.e., before

entering a Debtor- Creditor agreement (DCA).

3. CDR Cell-The CDR cell will be assisting the above

two tiers in all their functions. It is pertinent to

note that not all the cases are considered for debt

restructuring. The CDR Cell after taking the initial

scrutiny and the proposal puts up the matter

before the CDR empowered Group who shall

within one month decide whether rehabilitation

is prima facie feasible.

WORKING

CORPORATE DEBT RESTRUCTURINGCORPORATE DEBT RESTRUCTURING



ELIGIBILITY

DEBTOR- CREDITOR AGREEMENT

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A corporate having a total exposure of Rs. 10

Crores or more

BIFR cases can be recommended by the CDR Core

group with a minimum outstanding bank

exposure of Rs. 15 Crores.

Applicable where accounts are classified as

“standard”/'' ''sub-standard” in the books of at least 90%

of the lenders.

Applicable where projects are viable but the

accounts could not be taken up for restructuring, as they

are classified as “doubtful”. For this category CDR can be

made applicable if a minimum of 75% of the creditors (by

value) and 60% creditors (by number) give their consent

for restructuring of the account.

Exceptional cases like that of a willful defaulter may be

admitted for restructuring with the approval of the Core

Group only.

In case of SMEs, if the reason for classification of

borrower as willful defaulter is not transparent, then the

borrower is given an opportunity to satisfy itself under

Debt Restructuring for SMEs. Bankers have to ensure

that cases involving malafide intentions cannot be

covered.

Once the borrower is eligible for CDR, the debtor shall

enter into a legally binding agreement called Debtor-

Creditor Agreement (DCA) which lays down the policies

and the guidelines for restructuring. An important

element of the DCA would be “standstill” agreement

binding for 90 days or 180 days by both parties, wherein

both the parties commit themselves not to take recourse

under any other legal action, to enable the cell to

restructure the debt without any judicial intervention.

In case of non-compliance to the CDR agreement or the

terms and conditions depending on which the CDR is

executed, the bank can reject the benefits granted under

CDR and can also file for a claim, provided sufficient

Category I-

Category II-

notice is issued by the bank to the company to comply

the same.

The scheme of restructuring shall be submitted 7 days

before the meeting of the CDR Empowered Group (CDR

EG). The CDR EG shall within 60 days make a final

decision, except in large and complicated cases, the time

would be 90 days. The CDR core group may give in

principle approval for re-entry, rework, entry of BIFR

cases and refer it to CDR EG within 60 days of approval

by the core group. If a final decision is not taken in 60/90

days the restructuring proposal would automatically be

treated as closed unless extended up to a maximum limit

of 180 days. A case once closed will be reconsidered only

with the approval of Core Group.

To infuse additional funds;

To get a moratorium period (repayment holiday);

To convert debt into equity;

To convert an outstanding interest amount to term

loan;

To waive interests or a concessional rate of

interest;

To convert fund based limits to non-fund based,

vice versa;

To effect restructuring of limits with the banks (in

case of multiple bank limits).

Increased ability of the company to meet its debt

Gain on the company's liquidity and finance.

Tailoring a corporate debt restructuring strategy

according to the requirement

Protects the interest of the stakeholders

Involvement of an independent cell, not

influenced by any interests.

TIME FRAME

RESTRUCTURING MECHANISM

PROS

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CONS

EVALUATION

ROLE OF CS IN IMPLEMENTATION OF CDR

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Restricted access to fresh credit application

Approval of the creditors, in some cases

Difficult to implement Cross border exposures

The restructuring laws in India are time consuming like:

Winding up – (which does not provide for a time

frame),

Compromise/ Arrangements- (Requires several

meetings to be held and courts approval),

BIFR - (For sick companies),

SARFAESI - (Requires the asset classification to be

a Non performing asset in the books of the lender).

Despite these complications arising in some situations

cannot be ruled out, especially in case of multiple

banking facilities where one of the bankers does not

agree to the CDR proposal. In such a case, the company

may with the approval of other bankers go ahead for

CDR with the remaining bankers or the banker (which is

not agreeing) may be given an exit option.

Diligence report and certification with respect to

Multi banking arrangements

Drafting of a scheme of restructuring

Preparing/reviewing various legal papers

Ensuring compliance under the listing agreement

To ensure compliance with various capital market

Intermediaries like RBI, Stock Exchanges, SEBI,

etc.

Registration of Charges

Representing the Company before the CDR cell

Acting as a co-ordination between the company

and the CDR cell.

The Company secretary plays a vital role in drafting the

Flash Report, Review Report, Final Restructuring

Proposal, Diligence report, various letters and

correspondence, etc.

In case of a listed company, additional compliance with

the stock exchanges is required to be made in case of the

public shareholding going below 10% or 25%, post the

CDR mechanism. CDR is price sensitive information, as

this is directly related to the financial activity of a

company. The stock exchanges should be informed

regularly when:

Company's arrangement to go for CDR

After getting the approval of Debtor Creditor

Agreement by the Board

After getting the letter of approval from the CDR

cell in Mumbai and the same is accepted by the

Board.

As on 31.12.2011, total 364 cases are referred to CDR cell,

out of which 53 are rejected or closed and 276 cases are

already approved with an aggregate debt limit of Rs.

1,42,514Crores. Balance of 35 cases are under

restructuring with a debt limit exposure of Rs. 23,396

Crores.

In the recent past several telecom and power sectors

have filed for restructuring. Even companies like 3i

Infotech Limited, GTL Industries, etc have approached

for debt restructuring under CDR mechanism.

An all-time high of 69 cases with debt limit of Rs. 52,787

Crores was referred to corporate debt restructuring cell

by different bakers till Jan 2012.

The CDR mechanism as a one stop solution can help

both the lender and the corporate to come to a mutual

understanding, however varied it may be. With the

involvement of multiple lenders, there is every chance

that any restructuring process would face obstacles and

time-delays. Hence the CDR system can be considered

as neutrality of involvement to negotiate the terms and

conditions between the bank and the company.

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SUCCESS RATE

CONCLUSION



SMALL IS THE NEXT BIG THINGSMALL IS THE NEXT BIG THING

"Investment Opportunities made more favorable by BSE&NSE for 'SME' Platforms"

Ms. Tadikonda Sharawathi

[email protected]

Leading bourses BSE and NSE launched their SME

exchange platforms to enable small and medium

enterprises to raise funds and get listed as public entities.

While BSE kick-started its SME platform under the brand

name of BSE SME Exchange with listing of BCB Finance,

NSE followed suit by announcing the launch of its own

platform 'Emerge'.

On the face of it, this exchange should be a god-send for

India's 26 million SMEs who suffer a chronic problem

accessing capital. So where India's big two, the National

Stock Exchange Ltd, and Bombay Stock Exchange Ltd,

stipulate a minimum paid-up capital of Rs 10 crore (Rs 100

million), companies with lower paid-up capital can raise as

little as Rs 50 lakh (Rs 5 million) on this new SME platform.

According to the Securities and Exchange Board of India,

the new platform has been formulated after a detailed

study of best practices from across the world and feedback

from market participants. It has also taken into account

learning from past attempts. One was Over-the-counter

Exchange of India, launched in 1990 with aim of becoming

the Nasdaq of India; it introduced many concepts that were

new to the Indian capital markets then such as screen-

based nationwide trading, sponsorship of companies,

market making and scripless trading.

However, the 1992 scam and the bear market that followed

killed the initiative. BSE Indonext, launched by then

Finance Minister P Chidambaram in 2007, was specially

created to cater to SMEs listed on regional stock exchanges.

Since regional stock exchanges were unable to attract trader

attention for lack of advanced technology, BSE tried to give

them a lease of life under the new platform. The companies

listed on BSE IndoNext, however, did not attract much

market participation either.

So how is the BSE SME different?

The concept is similar to the OTCEI, but additional

safeguards such as 100 % underwriting of offerings, easier

compliance norms such as half-yearly reporting instead of

quarterly for bigger firms, and the provision to migrate to

the main board have been put in place. Sebi has also waived

listing conditions such as profitability for three years,

approval of prospectus by Sebi and so on. The SME

exchange is off the blocks with BCB Finance, a Mumbai-

based firm, launching its first IPO.

As Small and Medium Enterprises (SMEs), particularly in

developing countries like India, are the backbone of the

Nation's Economy, they constitute the bulk of the industrial

base and also contribute significantly to their exports as

well as to their Gross Domestic Product (GDP) or Gross

National Product (GNP). Micro, Small and Medium

Enterprises (MSMEs) contributes 8% of the country's GDP,

45% of the manufactured output and 40% of our exports. It

provides employment to about 6 cr. people through 2.6 cr.

enterprises.

The Micro Small and Medium Enterprise (MSME) sector

forms the largest generator of employment in the Indian

economy. It forms a major portion of the industrial activity.

SMEs play a very important role in the development of the

economy. They have been a key engine of economic

growth, job creation, wealth distribution and effective

mobilization of resources (capital and skills). SMEs in India

present a very vibrant and diversified profile in terms of

sectors, stage and geographic locations. Indian SMEs

operate in sectors which are very traditional to the most

modern and cutting edge industries competing with the

best in the world. SMEs in new economy sectors like IT, IT

enabled, organized retailing, education, entertainment,

media, etc. represent the new and modern face of Indian

SMEs. Indian SMEs are also taking an active role in social

sectors and very innovative business models are being

proposed to solve the innumerable problems of rural

population in areas like financial inclusion, healthcare,

education, etc.

Why the SME exchange needs a big hand :

Hyderabad Chapter



The Prime Minister's Task Force (Jan. 2010) has

recommended to set-up a dedicated Stock Exchange/

Platform for SME. SEBI has also laid down the regulation

for the governance of SME Exchange/Platform. Bombay

Stock Exchange Ltd, an Exchange which has founded the

equity cult in the country has witnessed many companies

becoming big from small by raising funds from Capital

Market.

On recognition of the need for making finance available for

to small and medium enterprises SEBI has decided to

encourage promotion of dedicated Platforms for listing and

trading of Securities issued by the Small and Medium

Enterprises (SME's). Securities and Exchange Board of

India (SEBI) accorded approval to the proposed SME

Exchange by BSE Ltd. on September 27, 2011.

The necessary changes and amendments are being made in

the rules, bye-laws and regulations of the cash market for

making a provision for SME exchange. The listing norms

have been extremely simplified and made convenient for

SMEs compared to listing norms on the main board.

Provide SMEs with equity financing opportunities to

grow their business – from expansion to acquisition

Equity Financing will lower the Debt burden leading

to lower financing cost and healthier balance sheet

Expand investors' base which in turn will help for

getting secondary equity financing, including

private placement

Enhance Company's visibility. Media coverage can

provide SMEs with greater profile and credibility

leading to increase in the value of the shares

Incentive for greater venture capital participation by

providing them an exit route

Greater incentive for the employees as they can

participate in the ownership of the company and

benefit from being shareholders

Encourage innovation and entrepreneurial spirit

Capital Market will help distribute risk more

efficiently by transfer of risk to those who are best

able to bear it

SME sector will grow better on two pillars of

Financial system, i.e., Banking for debt capital and

Highlights of SME Exchange:

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Capital Market for equity capital

Initiating a dedicated Stock Exchange for SMEs will

lead to diversification of resources of finance and

help build a bridge between the SMEs, Private

Equity and the Venture Capital by providing an exit

route

Going public would provide the MSME's with equity

financing opportunities to grow their business - from

expansion of operations to acquisitions.

Companies in the growth phase tend to get over-leveraged

at which point, banks are reluctant to provide further

credit. Equity capital is then necessary to bring back

strength to the balance sheet. The option of equity

financing through the equity market allows the firm to not

only raise long-term capital but also get further credit due

through an additional equity infusion. The issuance of

public shares expands the investor base, and this in turn

will help set the stage for secondary equity financings,

including private placements.

In addition, Issuers often receive more favorable lending

terms when borrowing from financial institutions. The

mechanics of listing on a stock exchange (audited balance

sheets, being subject to corporate governance norms etc)

would address many of the transparency and

informational asymmetry constraints that the financial

institutions face in lending to the SME sector. In addition,

equity financing lowers the debt burden leading to lower

financing costs and healthier balance sheets for the firms.

The continuing requirement for adhering to the stock

market rules for the issuers lower the on-going information

and monitoring costs for the banks. Favorable terms of debt

mezzanine finance for listed companies

On getting listed will improve customer client credibility,

likely to enhance the company's visibility. Greater public

awareness gained through media coverage, publicly filed

documents and coverage of stock by sector investment

analysts can provide the SME with greater profile and

credibility. This can result in a more diversified group of

investors, which may increase the demand for that

company's shares leading to an increase in the company's

value.

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Benefits of Listing at BSE & NSE SME Platform

2. Increased visibility and prestige

1. Access to capital and future financing

opportunities



3. Venture Capital (VC)

4. Liquidity for shareholders

5. Create employee incentive mechanisms

6. Facilitate growth through Mergers and

Acquisitions

7. Encourages Innovation & Entrepreneurial Spirit

It has been seen that there is greater vitality of venture

capital in stock market centered systems. The

underdeveloped equity culture has made it difficult for

companies to both get into the VC phase as well as graduate

from venture capital/startups phase to a scale of operations

that would make them internationally competitive. A

vibrant equity market would prove to be an added

incentive for greater venture capital participation by

providing an exit option leading to a reduction in their lock-

in period.

Becoming a public company establishes a market for the

company's shares, providing its investors with an efficient

and regulated vehicle in which to trade their own shares.

Greater liquidity in the public market can lead to better

valuation for shares than would be seen through private

transactions. Early risk investors get tax benefits on exiting

on platform.

The employees of the SME enterprises can participate in

the ownership of their own company and benefit from

being a shareholder. This can serve to ensure stronger

employee commitment to the company's performance and

success. Share options in a public company have an

immediate and tangible value to employees, especially as a

recruitment incentive.

As a public company, company's shares can be utilized as an

acquisition currency to acquire target companies, instead of

a direct cash offering. Using shares for an acquisition can be

a tax efficient and cost effective vehicle to finance such a

transaction, and have ability to complete M&A in timelier

manner.

The ability of companies in their early stages of

development to raise funds in the capital markets allows

these companies to grow very quickly. This growth helps

speed up the dissemination of new technologies

throughout the economy. In addition, by raising the

returns available from pursuing new ideas, technologies

etc. the capital markets facilitate entrepreneurial activities.

8. Efficient Risk Distribution

9. Employees Stock Options

The development of the capital markets has helped

distribute risk more efficiently by transfer of risk to those

best able to bear it. This ability to transfer risk facilitates

greater risk- taking, but this increased risk-taking does not

destabilize the economy. Thus the capital markets ensure

that capital flows to its best uses and that riskier activity

with higher payoffs are funded.

So far BSE SME has received wonderful response from

various sectors, including agro-based industry,

manufacturing, textiles, IT, construction, etc. A number of

Merchant bankers are also optimistic about the initiative.

Despite the many benefits associated with public listing,

the MSME's are not able to access the capital markets

through existing Stock Exchanges due to the stringent

regulatory, disclosure and financial requirements. The

creation of a separate Stock Exchange/ separate platform on

existing exchanges for MSME's designed to cater to the

needs of Indian MSME's has been on the policy makers

agenda for some time now. A dedicated stock exchange for

the SME sector would allow the SME's to access capital

markets easily, quickly and at lower costs. The dedicated

exchange is expected to provide better, focused and cost

effective service to the SME sector.

ESOPs become powerful tool to attract and retain talent by

Compensating employees without affecting cash flows at

National Stock Exchange.

BSE SME has tied up with channel partners who include

various institutions and associations engaged in the

development of SMEs. Various awareness programmes are

lined up to cover all parts of the country in making

industries aware of the new Platforms by BSE and NSE.

BSE SME is also planning to take SME cluster approach in

the development of SME segment. Criticle Analysis:

(Conclusion)

A good start is important in a race but in the case of the SME

exchange, there are no podium finishes and the exchange

needs a lot of running to do before it can get anywhere near

the finish line. Can we set the exchange a finish line? Let us

use a simple formula.

Estimates put the contribution of SMEs to the country's

“SMALL IS THE NEXT BIG THING”



gross domestic product at eight per cent. The big

exchanges, which are considered barometers of India's

trillion-dollar economy, have a market capitalisation of

around a trillion dollars. Therefore, an SME exchange,

which represents eight per cent of the economy, should

have a market capitalisation of $80 billion or Rs 4 lakh crore

(Rs 4 trillion). Assuming SME promoters will sell stocks

worth 30 per cent of their companies in the exchange, we

should see initial share sales of Rs 1.2 lakh crore (Rs 1.2

trillion). Investment bankers say these companies won't

enjoy the same valuations as the big boys. So, let us assume

that these stocks will be sold at a tenth of values

commanded by big boys, say, Rs 2,000crore(Rs120billion).

Thus, the finish line for, say, the next three years will be

when the SME exchange has helped raise Rs 12,000 crore --

that is, Rs 4,000 crore (Rs 40 billion) every year from now.

Going by the first IPO, where the company sold 30 per cent

stock to raise close to Rs 9 crore (Rs 90 million), wewill need

400 odd such small IPOs every year.

Is this asking for too much? Not when you look at the size of

the SME universe. There are about 26 million small firms

employing more than twice that number. They account for

45 per cent of the manufactured output and 40 per cent of

India's exports. So the Promised Land is beckoning.

The faithful are eager to get there. Right now, there is no

road for them. It has to be paved with the intentions of the

intermediaries. That's because the structure stipulated by

the regulators relies less on the platform itself but more on

market makers and merchant bankers. Take, for one, the

merchant banker. His role is much harder than for a bigger

company. He has to ensure that the issue is underwritten

fully and 15 per cent of the issue has to be underwritten by

his own balance sheet.

Also, since the minimum ticket size is set at Rs 1,00,000

bankers have to sell it to savvier and wealthier investors.

Convincing these investors about a relatively little-known

company is a difficult and time-consuming task. It is the

responsibility of the merchant banker to appoint a stock

broker as the market maker for the issue and, under the

rules, such market making should be done for a period of

three years.

And the market maker's engagement has to be deep: he will

be required to provide a two-way quote for 75 per cent of

the trading time in a day. The rules say: "The minimum

depth of the quote shall be Rs.1,00,000. However, the

investors with holdings of value less than Rs 1,00,000 shall

be allowed to offer their holding to the market maker in that

scrip provided that he sells his entire holding in that scrip in

one lot along with a declaration to the effect to the selling

broker."

The market maker's role, thus, is crucial because it gives

investor an exit option. Assuming that we get one merchant

banker to handle five companies at a time, we will need 80

dedicated intermediaries to bring 400 IPOs to the SME

exchange each year. Do we have 80? The big guns, who are

happy to talk endlessly about the importance of the

platform, are not too keen because they feel the money is

too little.

Even if a banker charges five per cent of the money raised,

which is usually the upper end of the fee for big public

offers, he will get a princely Rs 50 lakhs (Rs 5 million)for

managing an issue of Rs 10 crore (Rs 100 million). They

would rather spend their resources running free services

for government sharesales andboost league table positions.

And the smaller merchant bankers are either scared to

make the three-year commitment or have to charge

exorbitantly to be viable. The market maker for the first IPO

is charging Rs 75,000 a month. At one per cent of the money

raised every year, it makes the equity expensive for the

SME, say analysts.

Even assuming an SME does find interested players, there

is a lack of clarity on operational issues such as what will

happen if the entire floating stock ends up with the market

maker or the opposite position, where he is left with no

stock at all to deliver. Exchanges have made representations

to the regulator on these issues. If we are lucky, we will get

eight intermediaries who are serious enough about the

business and are willing to cut corners to make this bottom-

of-the-pyramid opportunity in to a viable cash making

business.

That means 40 IPOs annually, not 400. If this effort has to be

taken seriously and escape the ignominy of being bundled

in history with OTCEI and the Indonext platforms, then the

powers that be have to get eight sets of low-cost

intermediaries, 40 companies and an investment of Rs 400

crore (Rs 4 billion) on the table by March 1, 2013 alone.

That is not asking for too much if you remember where we

started this from. But anything less will be too small.



Vinay Kumar Joshi CS Rahul Jain

By RANJ & Associates, Company Secretaries

CORPORATE AFFAIRSoffer more flexibility to the Indian companies and

individuals.

Liberalized provisions relating to Corporate having

investment abroad

Creation of charge on assets of the Indian Party and

their group companies may be considered under the

approval route subject to submission of a 'No

Objection' by the Indian Party and their Group

companies from their Indian lenders

The bank guarantee issued by a resident bank on

behalf of an overseas JV/WOS of the Indian party,

which is backed by a counter guarantee/collateral by

the Indian party, shall be reckoned for computation

of the financial commitment of the Indian Party and

reported accordingly

Issuance of personal guarantee by the promoters of

the Indian Party shall also be extended to the indirect

resident individual promoters of the Indian Party

The proposals from the Indian party for undertaking

financial commitment without equity contribution

in JV/WOS may be considered under the approval

route

Indian Party is required to submit the Annual

Performance Report in respect to each Joint Venture

or Wholly Owned Subsidiary outside India, set up or

acquired by the Indian party within 3 months of the

closing of annual accounts of the JV / WOS

It has been decided that Compulsorily Convertible

Preference Shares (CCPS) shall be treated at par with

equity shares and the Indian party is allowed to

undertake financial commitment based on the

exposure to JV by way of CCPS

Impact / Highlights:

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Registration of Companies or LLPs which have one of

their objects is to carry on the profession of Chartered

Accountant, Cost Accountant, Architect, Company

Secretary etc.

Allotment of Director's Identification Number (DIN)

under Companies Act, 1956

Liberalization of ODI Norms

Ministry of Corporate Affairs vide circular No.2/2012 dated

01st March, 2012 informed that incorporation of companies

where one of the objects is to carry on the business of

Banking, Insurance or to practice the profession of

Chartered Accountancy, Cost Accountancy & Company

Secretaries, then the concerned Registrar of Companies

shall incorporate the same only on production of in-

principle approval /NOC from the concer ned

regulator/professional Institutes. Earlier, Registrar of

Companies/LLP were directed not to register companies or

LLPs with architecture as one of the objects till the next

direction, it is now clarified that they can now proceed with

such registration, provided that NOC from the concerned

regulator is furnished.

MCA vide circular No. 4/2012 dated 09th March, 2012

further extended the time for filing DIN-4 by DIN holders

for furnishing the PAN upto 30th April, 2012, in case the

same was not furnished at the time of obtaining DIN.

This is fourth revision in deadline

In case of failure to furnish PAN, Ministry may

disable the DIN and impose heavy penalty on such

DIN holder

The Reserve Bank of India has vide circular A. P. (DIR

Series) Circular No.97 and 98 dated 28th March, 2012

relaxed various norms on overseas direct investments to


-RBI/FEMA

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CORPORATE LAW UPDATES



Liberalized provisions with respect to Indian Resident

Individual acquiring Securities outside India:

Cap of 1% on qualification shares for being

appointed as director in the company has been done

away with

A person resident in India being an individual may

acquire foreign securities as qualification shares

issued by a company incorporated outside India for

holding the post of a Director

General permission has also been granted to a

Resident individual to acquire shares in a foreign

entity offered as consideration for professional

services rendered to the foreign entity

A resident individual to purchase equity shares

offered by a foreign company under its ESOP

Schemes, if he is an employee, or, a Director of an

Indian office or branch of a foreign company, or, of a

subsidiary in India of a foreign company, or, an

Indian company in which foreign equity holding,

either direct or through a holding company/Special

Purpose Vehicle (SPV), is not less than 51 per cent

Considering the developments in the global financial

markets and the fact that borrowers were experiencing

difficulties in raising ECBs within the existing all-in-cost

ceiling, the all-in-cost ceiling for ECBs with average

maturity of 3 and up to 5 years was enhanced to 6 months

Libor + 350 bps with effect from November 23, 2011 and

was subject to review on March 31, 2012. However, on a

review, it has been decided to continue with the enhanced

all-in-cost ceiling for a further period of six months in

respect of ECBs.

The all-in-cost ceiling is applicable up to September

30, 2012 and subject to review thereafter

All other aspects of ECB policy remain unchanged

RBI vide circular DNBS.CC.PD.No.265/03.10.01/2011-12

dated 21st March, 2012 observed that NBFCs that are

predominantly engaged in lending against the collateral of

gold jewellery have recorded significant growth in recent

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External Commercial Borrowings (ECB) Policy – Review

of all-in-cost ceiling


Lending Against Security of Single Product – Gold

Jewellery

years both in terms of size of their balance sheet and

physical presence. This in turn, has led to their increased

dependence on public funds including bank finance and

non-convertible debentures issued to retail investors. RBI

has asked non-banking finance companies (NBFCs) to cap

the quantum of loans they give against gold as collateral.

All NBFCs shall maintain a Loan-to-Value (LTV) ratio

not exceeding 60 percent for loans granted against

the collateral of gold jewellery

Balance sheet to disclose the percentage of such

loans to their total assets

NBFCs primarily engaged in lending against gold

jewellery (such loans comprising 50 percent or more

of their financial assets) shall maintain a minimum

Tier l capital of 12 percent by April 01, 2014

NBFCs should not grant any advance against bullion

/ primary gold and gold coins

RBI vide circular No.89 dated 01st March, 2012 informed

that the Securities and Exchange Board of India (SEBI)

registered FIIs are allowed to invest only in listed non-

convertible debentures (NCDs) / bonds issued by an Indian

company.

Earlier FIIs were allowed to invest in 'to be listed'

debt securities

SEBI registered FIIs can now invest in primary issues

of Non-Convertible Debentures (NCDs)/ bonds

Listing of such bonds / NCDs is committed to be

done within 15 days of such investment failing

which, FII shall immediately dispose of these

bonds/NCDs either by way of sale to a third party or

to the issuer

The Securities and Exchange Board of India has vide

Circular CIR/MRD/DP/ 09 /2012 dated 30th March, 2012

tightened the algo trading rules and issued detailed

guidelines mandating stock exchanges to control

possibilities of potential systemic risk caused by the use of


Foreign Institutional Investor (FII) investment in 'to be

listed' debt securities


-SEBI

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SEBI issues Guidelines on Algorithmic Trading



sophisticated automated software by brokers to trade on

exchanges. These guidelines to take effect within a period

of one month from the date of this circular.

Broking firms will need prior approval of stock

exchanges to carry out algo trades

Brokers will only get approvals for algo trading after

they satisfy the stock exchanges by implementing

the minimum level of risk controls such as check on

price, quantity, order value and cumulative open

order value check

Real-time monitoring systems to be deployed by

brokers to identify algorithms that may not behave

as expected

It will ensure the stock broker provides the facility of

algorithmic trading only after receiving permission

from the regulator

Onus on exchanges to ensure maintenance of

orderly trading in the market

Exemptions from 100% promoter(s) holding in demat form

In furtherance to the SEBI circulars SEBI/Cir/ISD/3/2011

dated June 17, 2011 and SEBI/Cir/ISD/05/2011 dated

September 30, 2011 the Capital Market regulator vide its

circular SEBI/Cir/ISD/1/2012 dated March 30, 2012 provided

some exemptions to promoters from converting their

shareholding into demat form.

Shares where the promoter has died would be

exempted from such conversion

Shares where issue of promoter shareholding is



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before any court or tribunal would be exempt

In cases wherein promoters have sold their shares in

physical format and have not registered for a

transfer with the company are also to be exempt

Shares allotted to promoters that await final

approval for listing from a stock exchange will be

given 30 days for dematerialisation. Once the

exchange gives final listing approval, shares will be

given 15 days to demat

SEBI has issued guidelines for credit rating agencies

(CRAs) through its circular CIR/MIRSD/3/2012 dated

March 01, 2012. At present, there are 5 registered CRAs in

India, including CARE, ICRA, Fitch, CRISIL and Brickwork

Ratings India.

CRAs will keep a record of discussion summary

with issuer, management and auditors

CRAs will also be required to maintain records of

voting details of the rating committee for five years

after the maturity of the instrument

CRAs will formulate policies for conflict of interests

Individuals in the credit rating process will not be

allowed to hold shares of the issuer

CRAs will be required to disclose methodology of

ratings and compensation arrangement with the

issuer

The increased transparency will enhance investors'

confidence in CRAs' ability to manage conflicts of

interest

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Guidelines for Credit Rating Agencies


MCA UPDATE:

MCA has now allowed to file the Forms / returns without simultaneous payment by using

Pay later Option. Forms can be filed from any user ID and payment can be made from any

other user ID by using credit / debit / internet bank system within 7 days of filing. It is a great

relief to the practising professional and we need not insist the client to make the payment in

advance.

MCA UPDATE:

MCA has now allowed to file the Forms / returns without simultaneous payment by using

Pay later Option. Forms can be filed from any user ID and payment can be made from any

other user ID by using credit / debit / internet bank system within 7 days of filing. It is a great

relief to the practising professional and we need not insist the client to make the payment in

advance.



Sl.No Festival Day Date

1 Republic Day Thursday 26 January

2 MahaSivaratri Monday 20 February

3 Ugadi Friday 23 March

4 Annual Closing of Accounts Day Monday 2 April

5 Good Friday Friday 6 April

6 Dr. B. R. Ambedkar Birthday Saturday 14 April

7 May Day Tuesday 1 May

8 Independence Day Wednesday 15 August

9 Ramzan ( ID-UL-FITR) Monday 20 August

10 Vinayakachavithi Wednesday 19 September

11 Half Yearly closing of accounts day Saturday 29 September

12 Gandhi Jayanthi Tuesday 02 October

13 Durgaasthami Monday 22 October

14 Vijaya Dasami/ Dussehra Wednesday 24 October

15 Bakrid Saturday 27 October

16 Deepavali Tuesday 13 November

17 Christmas Tuesday 25 December

The following Festival Occur Sunday

during the year 2012

1 Sankranthi/Pongal Sunday 15 January

2 Milad-Un-Nabi Sunday 05 February

3 Muharram Sunday 25 November

HOLIDAYS UNDER THE NEGOTIABLE INSTRUMENTS ACT, 1881 FOR THE YEAR 2012.

ATTENTION – LISTED COMPANIESSubmission of Annual Audited Results by 30th May 2012

SEBI amended the Clause 41 of the Listing Agreement and substituted new sub-clause (I)(d) in lieu of existing clause thereof,which mandates that w.e.f. the Quarter/ the financial year ending on 31st December 2011, all listed companies have to submitthe Audited Financial Results for the entire Financial Year, within a period of 60 days of the end of the Financial Year. That is,the option available under the erstwhile Clause 41 for submission of either the unaudited results for the last quarter orsubmission of audited results for the entire year, has now been done away with, and the listed companies have tomandatorily submit the Audited Financial Results only, that too within the specified period of 60 days from the end of theQuarter.

Further, in cases of listed companies having Subsidiaries, while submitting their annual audited financial results preparedon stand-alone basis, as mentioned above, they shall also submit annual audited consolidated financial results to theExchanges within the stipulated period of 60 days from the end of the financial year.

The newly inserted clause also mandates that the companies shall also submit the audited financial results in respect of thelast quarter along with the results for the entire financial year, with a note that the figures of last quarter are the balancingfigures between audited figures in respect of the full financial year and the published year to date figures upto the thirdquarter of the current financial year.



In a nutshell, Listed Companies shall:

Submit Audited Financial Results for the last quarter within 60 days of the end of the Quarter to Stock Exchange (s)

Also, submit Audited Financial Results for Full Year within 60 days of the end of Financial year

In case of Companies with Subsidiaries, while submitting Annual Audited Financial Results also submit AnnualAudited Consolidated financial results to the Stock exchanges within a period of 60 days from the end of theFinancial year.

The option to submit un-audited results for the last quarter was done away with.

However, it seems that the SEBI has skipped to bring consequential changes to Clause 41 (I) (eaa), which provides that “whena company opts to submit un-audited financial results for the last quarter of the financial year, it shall, submit astatement of assets and liabilities as at the end of the financial year only along with the audited financial results for theentire financial year, as soon as they are approved by the Board” which is conflicting with the above change as it presumesthat the Company has an option to opt for submitting Un-audited financial results for the last quarter.

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Comments:

ICICI WITH THREE OTHERS LAUNCHED INDIA'S FIRST INFRASTRUCTURE DEBT FUND

ICICI Bank inked a memorandum of understanding on 5th March 2012 with Bank of Baroda, Citicorp Finance India Ltd,

Life Insurance Corporation launched India's first infrastructure debt fund (IDF) of a capacity of 2 billion dollar.

ICICI Bank along with a wholly owned subsidiary, Bank of Baroda, Citicorp Finance India Ltd and Life Insurance

Corporation would hold 31, 30, 29 and 10 per cent stake in the fund respectively and this fund would raise debt capital from

both domestic and foreign resources

The fund would finance infrastructure projects which require a whopping one trillion dollars in the next five years and will

invest in infrastructure projects under the public-private partnership model that have completed one year of operation.

The funds may take next two-three years to get wholly functional.

CORPORATE UPDATES

CS Nihita NagajayantiCompany Secretary

[email protected]

Flash News ………Flash News ………Flash News ………Flash News ………Flash News

SEBI vide its Circular CFD/DIL/LA/SK/AT/8278/2012 dated April 11, 2012 has reviewed the above provision and, as aone-time measure, restored the earlier provision for the time being. Accordingly the timeline for submission of financialresults for the FY 2011-12 shall be as under:For the quarter ended FY 2011-12 and in respect of annual audited results for FY 2011-12, Listed entities have an optionto either: -

Submit limited reviewed Q4 results within 45 days from end of the quarter and thereafter submit annual auditedresults as soon as they are approved by the Board.

Submit annual audited results within 60 days from the end of fourth quarter along with Q4 results which wouldbe a balancing figure.

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BANK OF BARODA OPENED 1001 ULTRA SMALL BRANCHES ACROSS INDIA

UNION CABINET APPROVED THE MARRIAGE LAWS (AMENDMENT) BILL, 2010

“ADOPT FAIR PRACTICES CODE”…. SAYS RBI TO NBFCS.

Bank of Baroda, the public sector lender, on 22 March 2012 launched 1001 ultra small branches to provide banking services to

the people of villages which don't have access to banking services under the financial inclusion initiative. On the same day,

551 ultra small branches were inaugurated across Uttar Pradesh and Uttarakhand. Bank of Baroda is set to open 1700 ultra

small branches in various villages across the country.

The proposal to set up ultra small branches is in a bid to further drive the agenda for financial inclusion and to provide robust

set of banking services for the rural masses. ultra-small branches are currently being set up at select habitations where

Business Correspondents (BCs) would deal with cash transactions. These ultra small branches will include services

provided by BCs as well as bank officials who will visit such branches on a regular basis and offer insurance and pension

products, in addition to providing regular banking related services.

On 23 March 2012, The Union Cabinet of India approved the redrafted Marriage laws (Amendment) Bill, 2010. The bill seeks

to give a woman share in her husband's property in case of a divorce but the quantum of share will be decided by the courts

on case by case basis. According to the redrafted bill, adopted children will have rights on par with biological off-springs of a

couple in case the parents go for a divorce. It is important to note that all these changes in the bill were based on the

recommendations made by the Parliamentary Standing Committee on Law and Justice and Personnel.

The Marriage Laws (Amendment) Bill, 2010, was introduced in the RajyaSabha in August 2010 and then it was referred to the

Parliamentary Standing Committee on Law and Justice and Personnel. Earlier, The Union Cabinet of India on 10 June 2010

had approved the introduction of a Bill, namely, the Marriage Laws (Amendment) Bill, 2010 to further amend the Hindu

Marriage Act, 1955 and the Special Marriage Act, 1954, to provide therein irretrievable break down of marriage as a ground of

divorce..

The Reserve Bank of India on simplified it guidelines on the fair practices code (FPC) to be adopted by non-banking finance

companies (NBFCs) in their normal course of lending business. These FPC have to be implemented by all the NBFC with the

approval of their within one month from the date of issue of this circular (26th march 2012). Also RBI directed that the FPC

should be published and disseminated on the web-site of the company for public information.

RBI granted the freedom of drafting the FPC by enhancing the scope of the guidelines but such FPC should adhere to the

spirit of guidelines The guidelines issued by RBI on FPC states that :

1. adequate disclosures on the terms and conditions of a loan

2. adopting a non-coercive recovery method.

3. to mention the penal interest charged for late repayment in bold in the loan agreement

THE ECONOMY THAT WAS………AND THAT IS….On 15 March 2012, honorable finance minister Mr. Pranab Mukherjee tabled the Economic Survey of India, the progressreport of our Economy. Despite the fact that there is considerable slack in the growth rate, the economy has been one of thefastest growing economies of the world. The Indian economy is slotted to grow at the rate of 6.9% in the year 2011-2012.Country's sovereign credit rating was stated to have risen by a substantial 2.98 percent in 2007-12.

1. Externally: global melt down; global economy became adverse in September 2011 due to the euro zone countries.

2. Internally: slack in the industrial growth. The industrial sector has performed poorly, retreating to a 27% share of theGDP.

The main reasons for the slack in growth rate:



Highlights

GLIMPSES:

SECTORAL GROWTH:

v Agriculture & allied sectors were are estimated to achieve a growth rate of 2.5% in 2011-12 withfoodgrains production likely to cross 250.42 million tones as a result of increase in the production of rice in a number ofstates.

The slowdown in Indian economy was attributed largely to weakening industrial growth which accounted for only 27% of The gross Domestic product(GDP)

major contributor with of 59 % contribution in GDP ( 1% more than last financial year contribution) .Achieved an impressive growth rate of 9.4 %

The overall growth during April-December 2011 reached 3.6% compared to 8.3% in the corresponding period of the previousyear.

Indian rupee loses weight and becomes light: The fiscal 2011-12 was marked by a sharp depreciation of the Indian rupee. Inthe current fiscal 2011-12, on month-to-month basis the rupee depreciated by 12.4 per cent from 44.97 per US dollar in March2011 to 51.34 per US dollar in January 2012. Rupee reached a peak of 43.94 on 27 July 27 2011 and lowest at 54.23 per US dollaron 15 December 2011 indicating a depreciation of 19 per cent so much so that our central banker, the RBI was required to selldollars twice in the fiscal to help raise the value of the rupee.

External debt: Due to high commercial borrowings and short term debt 2011-12 India's external debt stockstood at US $ 326.6billion at end-September 2011 vis-à-vis US $ 306.4 billion at end-March 2011 ( an increase of US $ 20.2 billion (6.6 per cent)

Inflation as measured by the wholesale price index (WPI) remained high during greater part of 2011-12 fiscal, though by yearend a noticeable slowdown in price rise was registered. Food inflation, in particular came down significantly. RBI adoptedstringent monetary policies to control inflation as well as curb inflationary pressures. The high rate of interest established bythe central bank lowered growth rate of investment in the economy as the sharp increase in interest rates resulted in highercosts of borrowings and other rising costs affecting profitability.

During the first half of 2011-12, India's export growth was 40.5%, but it could not maintain the samemomentum throughout the fiscal. Imports grew rapidly, by 30.4% during 2011-12 (April-December). India's Balance ofPayments widened to $ 32.8 billion in the first half of 2011-12, compared to $29.6 billion during the corresponding period ofthe earlier fiscal 2010-11.The foreign exchange reserves increased from US $ 279 billion at end March 2010 to US $ 305 billion atend March 2011. Reserves were found to vary from an all-time peak of US$ 322.2 billion at end August 2011 and a low of US $292.8 billion at end-January 2012.

the banking sector on a whole showed an impressive increase in priority sector lending. The agriculturalsector received a total disbursal of Rs 446779 crore credit as against a target of Rs 375000 crores in-2010-11. The EconomicSurvey 2011-12 underlined the fact that flow of agricultural credit was highly impressive

The Labour Bureau's twelve quarterly quick employment surveys revealed that the effect of the economicslowdown has been felt by the employment sector. The surveys indicated an upward trend in employment since July 2009was maintained. Overall employment in September 2011 over September 2010 increased by 9.11 lakh, with the highestincrease recorded in IT/BPO (7.96 lakh) sector.

the growth in this sector was bag of mixed response. During 2011-12 was both good and bad. This sector hassome star performer who showed growth like power, petroleum refinery, cement, railway freight traffic, passenger handledat domestic terminals, where as some performers like upgradation of NHAI, coal, natural gas, fertilizers, handling of exportcargo at airports and number of cell phone connections showed negative growth. Steel sector witnessed moderation ingrowth.

The real GDP growth is expected to pick up to 7.6% in 2012-13 and 8.6% in 2013-14 as per the survey. As per the survey, giventhat fiscal consolidation is back on track, savings and capital formation should is likely to start rising. Also the RBI policy ratesare expected to be reduced in the back of easing of inflationary pressures. The lowered interest rates will encourageinvestment activity and have a positive impact on growth.

These projections were all made on the basis of assumptions regarding factors like normal monsoons, reasonably stableinternational prices, particularly oil prices, and global growth.

Primary sector:

Industrial growth:

Services sector:

Foreign trade :

Banking sector-

JOBTIMES:

Infrastructure:

Forecasts

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Hyderabad Chapter


Compounding of offences – Sec. 147,141 and 138 of NI

Act, 1881 r/w Sec.320 of CrPC 1973 & effect under

Sec.391 of Companies Act, 1956

Citation:

Points held:

JIK Industries Ltd. and Others vs. Amarlal V.

Jumani and another (2012) 3 SCC 255

The Hon'ble Supreme Court, inter alia, held that :

(i) Section 4 of the Code (Cr.PC), which is the

governing statute in India for investigation,

inquiry and trial of offences has two parts. Section

4 sub-section (1) deals with offences under the

Penal Code (IPC). Section 4 sub-section (2) deals

with offences under any other law (which would

include Negotiable Instruments Act, 1881).

(ref.para 69)

(ii) … no special procedure has been prescribed under

the NI Act relating to compounding of an offence.

In the absence of special procedure relating to

compounding, the procedure relating to

compounding under Section 320 (of CrPC) shall

automatically apply in view of clear mandate of

sub-section (2) of Section 4 of the Code (CrPC).

(ref.para 70).

(iii) ... There is no other statutory procedure for

compounding of offence under the NI Act.

S.V. Rama KrishnaM.Com,CAIIB, ACS, LL.M

Advocate & Corporate Legal AdvisorEmail: [email protected]

Disclaimer:For proper appreciation of issues and legal position, it is strongly recommended to have access to the full text ofthe judgments before using them by readers. Due to space limitation, entire facts of the case could not bediscussed. The points reproduced / highlighted need to be understood in the totality of discussions contained inthe relevant judgments.

Therefore, Section 147 of the NI Act must be

reasonably construed to mean that as a result of

the said section the offences under the NI Act are

made compoundable, but the main principle of

such compounding, namely, the consent of the

person aggrieved or the person injured or the

complainant cannot be wished away nor can the

same be substituted by virtue of Section 147 of the

NI Act. (ref. para 82)

(iv) … as a result of sanction of a scheme under Section

391 of the Companies Act, 1956 there is no

automatic compounding of offences under

Section 138 of the NI Act even without the consent

of the complainant. (ref. para 83)

( It is a very important judgment in cases of

compounding of offences generally and in

particular under NI Act, 1881).

Section 28 (iii-b) and (iii-d) of Income Tax Act, 1961

– profits and gains

The Hon'ble Supreme Court, inter alia, held that:

(i) It will be clear from Section 28 that under clause

(iii-b)cash assistance (by whatever name called)

Note:

Citation:

Points held:

Topman Exports vs. Commissioner of Income Tax,

Mumbai (2012) 3 SCC 593

24

LEGAL SCAN

(April, 2012)

Hyderabad Chapter


received or receivable by any person against

exports under any scheme of the Government of

India is by itself income chargeable to income tax

under the head “Profits and gains of business or

profession”. DEPB (Duty Entitlement Pass book)

is a kind of assistance given by the Government of

India to an exporter to pay customs duty on its

imports and it is receivable once exports are made

and an application is made by the exporter for

DEPB…. (ref. para 19)

(ii) .. the word “profit” means the gross proceeds of a

business transact ion less the costs of

transaction…… “Profits”, therefore, imply a

comparison of the value of an asset when the asset

is acquired with the value of the asset when the

asset is transferred and the difference between the

two values is the amount of profit or gain made by

a person. As DEPB has direct nexus with the cost

of imports for manufacturing an export product,

any amount realized by the assesses over and

above DEPB on transfer of DEPB would represent

profit on the transfer of DEPB. (ref. para 20 and

21).

CS K.K. Rao E-mail: [email protected]

Lot of changes have been proposed in the budgetpresented to the Parliament and all the readers have got theinformation through various sources. As it is not possibleto completely highlight the entire highlights, which ispossible through the budget seminar and I am sure youwould have attended similar such seminars on budgetproposals relating to service tax, the same is not beingrepeated. However some of the issues requiring attentionare brought to the notice of the members:

Rate of service tax increased from 10.3% to 12.36%effective from 1.4.2012.

Point of Taxation Rules 2011 have been suitablyamended so as to give relief to the individuals andpartnership firms to continue to pay on receipt basisprovided their gross total income for the previous yeardid not exceed Rs. 50 lakhs.

Central Government vide notification no. 13/2012-STdt. 17.3.2012 notified various percentages ofexemption with conditions specified therein underSection 66B of the Finance Act.

Notification no. 12/2012 dt. 17.3.2012 exempts numberof services from the purview of service tax net which

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G

is moreclarificatory in nature in view of the negativelist. Readers are advised to go through the list for betterunderstanding and application.

Notification no. 12/2012 dt. 17.3.2012 exempts numberof services from the purview of service tax netwhich is moreclarificatory in nature in view of thenegative list. Readers are advised to go through the listfor better understanding and application.

Service Tax Rules have been amended to give S e r v i c eTax Rules have been amended to give effect that theservice provider shall issue an invoice for the servicerendered within a period of thirty days as against theexisting fourteen days and the applicable period for thebanking company is forty five days.

Clarification vide notification no. 5/2012 dt. 17.3.2012indicates that the aggregate value shall not include thevalue of sum of the invoices issued for the serviceswhich are exempted during the financial year.

Applicable rate if tax under the composition scheme inrespect of Works Contract Service has been amendedfrom 4% to 4.8% with effect from 1.4.2012.

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25

SERVICE TAX UPDATE

Hyderabad Chapter


Report on Panel Discussion On Vodafone Verdict

Report on Leadership talk on “ICSI Vision 2020”&

Conversation with President, The ICSI for Students

Chapter along with International Fiscal Association-

Hyderabad Sub-chapter and FAPCCI organized a

Panel Discussion on the Judgment of the Supreme court

in the Vodafone Case at FAPCCI on 2nd March, 2012.

Sri Shujath Ali Bin, Chairman, Institute of Company

Secretaries of India– Hyderabad Chapter gave his

opening remarks and introduced the panelists and

moderator.

Sri P.V.S.S.Prasad dealt with Sec 9(1)(i) of IT Act - the

impact of Vodafone Judgement.

Sri T.S.Ajai dealt upon Review Petition filed by the

Department- And the Cause and Effect

Sri Jayesh Sanghvi dealt upon Sec 163 & 195.

Sri SampathRaghunathan explained the case laws of

Ramsay, AndolanBachav and McDowells as dealt in the

Vodafone Verdict.

The meeting ended with Vote of Thanks by Sri Mohan

Acharya Secretary, IFA- Hyderabad Sub Chapter

Chapter has organizeda Leadership talk on “ICSI Vision

2020”& Conversation with President, The ICSI for

students on 5 March, 2012 at Katriya Hotel. CS Shujath

Bin Ali, Chariman of the Chapter presided over the

function.

CS Nesar Ahmed President, The ICSI spoke about

Vision 2020, Core Values, he also spoke about core

values, infrastructure, ethics, integrity , and informed

students that training of 15 months would be extended

to 24 months. CS S.N.Ananthasubramanian Vice-

President, The ICSI, CS C. Sudhir Babu, CS R. Sridharan,

Council Members, The ICSI and CS S. S. Marthi,

Chairman, SIRC also addressed the students. CS Nesar

Ahmed President, The ICSI clarified the doubts raised by

the Students.

CS Vasudeva Rao Devaki, Secretary of the Chapter

proposed a vote of thanks.

Chapter has organised Leadership talk on “ICSI Vision

2020”& Conversation with President, The ICSI for

Students on 5 March, 2012 at Hotel Katriya. CS Shujath

Bin Ali Chairman of the Chapter presided over the

meeting and introduced all the delegates present on the

Dias. He gave brief description about President and Vice

President, The ICSI and Council Members.

CS Nesar Ahmed spoke about the issues pertaining to

core values, ethics, integrity and infrastructure. He also

spoke about service tax, vat as emerging areas and also

said the ICSI is partnering with global organizations . CS

AanthaSubrahmanyam, Vice President, The ICSI, CS R.

Sridharan, Council Member, CS C. Sudhir Babu, Council

Member and CS S.S. Marthi, Chairman, SIRC spoke on

the occasion. At the end of the session President

answered the queries raised by the members.

Chapter has organized a press meet with President, The

ICSI on 5 March, 2012 at Katriya Hotel. He told the press

that ICSI is introducing two new post membership

qualification course in completion law and corporate

re-structuring and insolvency and also informed that

new syllabus for Company Secretary foundation

programme and updated regarding draft syllabus for

executive programme and professional programme. He

also spoke on infrastructure and vision and mission,

Vision 2020.

Chapter has organized Valedictory session of Executive

Development progamme on 7 March, 2012 at Chapter

Report on President's Meet

Report on Press Meet.

Report on Valedictory session of Executive

Development Progamme

A Report on the activities of Hyderabad Chapter

CS PRESS REPORTER

Hyderabad Chapter


Premises. CS Shujath Bin Ali, Chairman of the Chapter

took over the chair and thanked all for being present in

the valedictory session. The Chairman shared his views

about quality improvement, leadership qualities,

thought process, knowledge sharing, communication

development, networking and best practices along with

corporate governance.

CS A.V. Rao appreciated the efforts taken over by the

new Committee members of ICSI Hyderabad Chapter

headed by Chairman CS Shujath Bin Ali to facilitate the

chapter as a knowledge hub with state of the art facility.

CS P.G. Issac Raj, Treasurer of the Chapter gave brief

introduction of Dr. Akbar Ali Khan (Chief Guest) for the

evening.

Dr. Akbar Ali Khan, Vice Chancellor, Telangana

University, Hyderabad, Chief Guest for the evening

while addressing all participants enlightened about

responsibilities of corporate sector, code of conduct,

behavioural requirement, professional qualities etc. He

told professional ethics and values are required for

doing good business. He emphasized to impart good

corporate governance practices in India.

He concluded his speech by quoting “SMART”

approach i.e S- Skillful, M-Marketable, A-Adaptable, R-

Reliable, T-Talent, all this are pre requisite for a good

Company Secretary.

Chairman then announced to present the certificates to

each student participant of this EDP programme. All the

office bearers and Chief Guest presented the certificates

to students, best participant award won by Ms. M

Rakhee Jain by the participants. CS Vasudeva Rao

Devaki, Secretary of the Chapter proposed vote of

thanks.

Chapter has organised a 5th Management Skills

Orientation Programme on 12 March, 2012 at Chapter

Premises. CS Shujath Bin Ali, Chairman of the Chapter

welcomed the gathering and congratulated the

participants on their achievement of successful

completion of professional programme and enrolling for

Report on Inauguration of 5th Management Skills

Orientation Programme [ MSOP]

MSOP. He also spoke on Corporate Governance its

importance and role of a Company Secretary in present

scenario etc.

CS S. S. Marthi, Chairman, SIRC spoke on Vision,

mission, Goals, code of conduct of the professional and

recent event of “Leadership talk on Vision 2020”

conducted by the Chapter.

CS C. Sudhir Babu, Council Member, The ICSI spoke on

importance of training sessions, MSOP classes, current

functions and crucial role of a Company Secretary in

Corporate world etc.

CS P.G. Issac Raj, Treasurer for the Chapter introduced

the Chief Guest.

Sri Atul Sobti , General Manager , P&D, S & ES , BHEL,

Hyderabad inaugurated by lighting of the lamp. He

shared his experience on Corporate governance and

best practices and BHEL with the participants conveyed

his hearty congratulations and thanks to Chapter for

bringing up high caliber professionals into this

Corporate world.


proposed vote of thanks.

Chapter has organized Investor Awareness

Programmed on 16 March 2012 with the support of

Finance Department of BHEL at Community Centre,

BHEL, Ramchandrapuram. The Programme was

initiated by CS.P.V.Arun Kumar, Manger Finance, BHEL

and the inaugural address was given by CS.Shujath Bin

Ali, Chapter Chairman and CS.M V Rao, Head Finance,

BHEL.

The Programme was moderated by CS.P.G. Issac Raj,

Chairman-Investor Awareness Clinic and Treasurer-

Hyderabad Chapter. First Speaker Mr. Samba Siva Rao,

Executive Director Zen Securities Limited spoke on the

various investment avenues available and analysis of the

markets with a highlight on capital markets. Second

Speaker CS. P. Jagannatham, Advocate dealt with the

IPO related aspects giving the insights to the participants

on the prospectus document. Third Speaker

CS.A.Satyanarayana, Company Secretary of Gulf Oil

Report on Investor Awareness Programme

Hyderabad Chapter


Corporation Limited appraised the rights of the

Investors, forums available for knocking the doors in

case of any grievances and redressal mechanism. Before

concluding the programme in the interactive session the

queries raised by participants were clarified by the

speakers.

The Programme was attended around 250 participants

which includes employees, officers and general public,

who expressed their happiness for organizing such type

of programme by Hyderabad Chapter under the aegis of

Ministry of Corporate Affairs, Government of India.

Chapter has organised meeting on Clause by clause

Analysis of Finance Bill, 2012 jointly with AP Tax Bar &

AIFTP on 22 March, 2012 at FAPCCI. CA V S Sudheer,

Indirect Taxes & CA V S Sudheer, Indirect Taxes were the

speakers. They spoke on the union budget in detailed

manner and clause by clause in particular Direct &

Indirect taxes. Members were actively participated in

the interactive session.

Chapter has organised Study Circle Meeting on Public

liability insurance, professional Indemnity &

comprehensive General Liability insurance – Risk

mitigation perspective. Datla K M S Raju, Managing

Director & CEO of Visista Insurance Broking Services

Pvt Ltd was the speaker. He dealt with Liability Vs

Other exposures, Contributory negligence, Assumption

of risk, Categories of Liability loss exposures, Increased

trends litigation, emerging risks - insurers response,

public / general liability, Professional indemnity / errors

& omissions liability / malpractice liability etc.,

CS Vasudeva Rao, Devaki, Secretary of the Chapter


Chapter has organisedValedictory session of

Management Skills Orientation Programme on 29

March, 2012 at Chapter Premises.

Report on Meeting on Clause by Clause Analysis of

Finance Bill, 2012.

Report on Study Circle Meeting

Report on Valedictory session of Management Skills

Orientation Programme

CS Shujath Bin Ali, Chairman of the Chapter welcomed

the gathering and congratulated the students for the

accomplishment of the course and MSOP training,

mentioning about the corporate social responsibility on

the budding professionals and how to face challenges.

CS SS Marthi, Chairman, SIRC briefed the guests about

the CS course, CS structure, learning, training and

educating programmes to members and also spoke

about the profession as the caretaker of the corporate

governance and CS professionals are entrusted in

drafting the policy of governance and further he spoke

about the vision of the institute and corporate social

responsibility on the professionals and requested the

budding professionals to be active participants for CSBF.

Sri K. Ramachandra Murthy, Editor-in-Chief, The Hans

India, HMTV, Guest of Honor addressed the

professionals as the important persons who lead the

corporate structure.He also requested the professionals

to restore the human phase in the corporate system, as

CS professionals are key managerial persons in the

corporate system and requested the professionals to

bring in more values to the corporate system which in

turn helps in growth of the country and thanked the

professionals.

Prof.B. VenkatRathnam, Vice-Chancellor,Kakatiya

University was the Chief Guest, congratulated the

professionals on completion of the course and requested

professionals to keep up the value of CS profession. He

spoke about the MSOP as a part of decision making, skill

development in the course and requested professionals

to serve with quality.

CS Shujath Bin Ali requested the dignitaries to distribute

the MSOP certificates to the students and Best

Participant award was awarded to Mr. Arkat Venugopal

Mudhaliar, Best speaker award was awarded to Mr. M.

Satish Choudhary and

Mr. Subash kumar Choudhary ,Better Speaker award

was awarded to Ms. BhuvaneshwariRathore and Good

Speaker award was awarded to Mr. Arkat Venugopal

Mudhaliar.

Chairman also announced Best Project award was

Hyderabad Chapter


awarded to project “Performance Appraisal” by

Mrs.Sushmaprabhakar, Ms.DivyaBharathiand Mr.

Kranthi.


proposed a vote of thanks.

Chapter has organsied full day seminar Revised

Schedule- VI, CARR & CARO on 27 March, 2012 at

Vaishnaoi Hotel. CS Sudheendhra Putty, Programme

Chair started the programme by giving a brief

introduction about the topic and its importance.

CS Shujath Bin Ali, Chairman of the Chapter spoke

about XBRL, technology, IFRS, Revised Schedule VI,

upcoming tax codes and annual participation scheme.

CS S.S Marthi, Chairman, SIRC gave his opening

remarks. CS Sudhir Babu, Council Member, ICSI

provided various updates from ICSI Headquarters.

CA D.K. Astik, Chief Executive Officer & Director, I2I

IFRS Management Services Pvt. Ltd was the Chief Guest

and hespoke relating to changes in corporate sector,

trustee deficit for investors, creating trust in

fundamental aspects, role of Company secretary in

creating trust, issuing compliance certificate .Further he

spoke on investors, regulators, investors scope in

globalization, internal audit, corporate standard

disclosures.

M.V Chakranarayana, ROC shared updates from MCA

and also congratulated Shri SS Marthi, Shri Shujath Bin

Ali for taking up these topics for seminar.

Sri AVNS Nageshwar Rao, Practicing Cost Accountant

covered Cost Accounting Record rules

Sri PolaRaghunath, Assistant Registrar spoke about

CARO (Company Audit Report Order)

Report on Full Day Seminar on Revised Schedule- VI,

CARR & CARO

Sri Sanjay Kumar Jain, Partner, Walker Chandiok& Co

spoke about certain practical aspects of CARO and

challenges being posed to professionals by CARO.

This session was coordinated by CS Vasudeva Rao

Devaki, Secretary of the Chapter

Sri Sumit Trivedi, Director, Deloitte Haskins &Sells and

Sri Darshan Verma, Associate Director, KPMG covered

Revised Sch VI..CS S Chidambaram , Company

Secretary in Practice spoke about revised schedule VI,

XBRL, CS employment and practise, legality of XBRL,

differences between schedule VI and XBRL, Liability of

Company Secretary, importance of section 211,211 (7),

209(6), form 1AA.

This session was coordinated by CS Sudheendhra Putty,

Member, and Managing Committee.

Chapter has organized Half-a-day workshop on

Intellectual Property Rights on 30 March, 2012 at Vasavi

Club.

CS R. Ramakrishna Gupta, Vice-Chairman of the

Chapter and the Program Chair welcomed the

gathering and presided over the function. Sri M. Vijay

Kumar, Founder & CEO - i-winip Services, explained

briefly about the various types and classes of IPRs and

their importance then Sri Ashok Kumar has briefed

about the litigation part of IPRs and given overview on

various practical cases he handled. CS M. Adinarayana,

Company Secretary & G.M. (Legal & Corp. Affairs),

NatcoPharma Ltd has explained about the practical

experiences in getting Compulsory License for cancer

drugs by NATCO.



Report on Half-a-day workshop on Intellectual

Property Rights”

When we are in ANGER, we are just one letter SHORT of DANGER. While in GOOD mood, we are one Letter MORE than GOD. Choice is OURS.

When we are in ANGER, we are just one letter SHORT of DANGER. While in GOOD mood, we are one Letter MORE than GOD. Choice is OURS.

QUOTE CORNERQUOTE CORNER

Hyderabad Chapter


PAYMENT OF ANNUAL MEMBERSHIP AND CERTIFICATE OF PRACTICE FEE FOR THE YEAR 2012-13

MODE OF REMITTANCE OF FEE

The annual membership fee and certificate of practice fee for the year 2012-13 will become due for payment w.e.f. 1st

April, 2012. The last date for payment of fee is 30th June 2012.

The membership and Certificate of Practice fee is as follows:-

*The certificate of practice fee must be accompanied by a declaration in form D duly completed in all respects and

signed. The requisite form 'D' is available on the website of Institute www.icsi.eduand also published elsewhere in this

issue.

(i) On-Line (through payment Gateway of the Institute's web-site (www.icsi.in) ) by following the steps

given below:-

a) The member has to visit the portal http://www.icsi.in

b) The member has to login in to self profile by selecting the option Member-- > Associate/Fellow

c) The member has to enter Membership number in the box provided.

d) The member has to enter password in the box provided (The member has to click on Reset

password link if creating for the first time)

e) After Logging in the member has to click on the link ' Annual membership Fee'

f) The member has to click on 'Proceed for Payment' button for making payment through online

payment gateway. The member may keep the generated acknowledgement for future reference

and record.

(ii) Credit card at the Institute's Headquarter at Lodi Road, New Delhi or Regional Offices located at Kolkata,

New Delhi, Chennai and Mumbai.

(iii) Cash/ local cheque drawn in favour of Rs. The Institute of Company Secretaries of India', payable at New

Delhi at the Institute's Headquarter or Regional/ Chapter Offices located at Kolkata, New Delhi, Chennai,

Mumbai and Chandigarh, Jaipur, Bangalore, Hyderabad, Ahmedabad, Pune respectively. Out Station

cheques will not be accepted. However, at par cheques will be accepted.

(iv) Demand draft / Pay order drawn in favour of Rs.The Institute of Company Secretaries of India', payable at

New Delhi (indicating on the reverse name and membership number).

For queries, if any, the members may please contact Mr. D.D. Garg, Desk Officer or Mrs. Vanitha Dhanesh on

telephone Nos.011-45341062/64 or Mobile No.9868128682 / through e-mail ids: [email protected], [email protected]

1. Annual Associate Membership fee Rs. 1125/-

2. Annual Fellow Membership fee Rs. 1500/-

3. Annual Certificate of Practice fee Rs. 1000/-(*)

The fee can be remitted by way of :

ANNOUNCEMENT

30

Hyderabad Chapter


Annual Participation Scheme [ APS ]

We are delighted to announce the continuation of the

ICSI- Hyderabad Chapter's Annual Participation

Scheme for 2012-13

As you all are aware that concept of Annual Participation

Scheme for Professional Development Programmes was

started by the ICS- Hyderabad Chapter in the year 2006

and subsequently it was continued. The concept was

appreciated and well received by the Members and

Corporates as it is convenient to make payment / take

approval at onetime to attend different Professional

Development Programmes throughout the year. The

scheme has perfected over the years based on the

feedback/suggestions from the Members of the scheme.

Still, we are constantly making all endeavour to make

this scheme more attractive and useful to the members.

In order to acquire new competencies and skills,

learning and training are sine qua non for professional

competence. Therefore, the Hyderabad Chapter is

organizing various professional development

programmes, which will be focused on the parameters

like - Optimization of Learning Process; Value Addition

to the working knowledge; Initiation to Multi-skilling.

The way to development is through purposeful activity.

The scheme shall strive to facilitate this development

Therefore, enrolling to the Annual Participation

Scheme assumes great significance and importance.

Annual Participation Scheme is valid from 1.4.2012 to

31.3.2013.

Firms, Corporates & other Individuals

[ allowed 1 person] - Rs. 10,000/-

Firms, Corporates & other Individuals

[allowed 2 persons] - Rs. 15,000/-

Members of the Institute

Backgroun

Importance of APS

Validity

Annual Fee

v

v

v

[allowed only registered member] - Rs. 6,000/-

To attend all the professional Development

seminars, conferences, programmes organized by

the Hyderabad Chapter free of charges throughout

the Financial Year.

Firms, Corporate Members may depute any person

from their organization to attend the programme

who need not be a member.

Individual Members will not be eligible to deputy

any other person.

All the categories of members will be entitled to

receive the background material

Concession in fee, for all other workshops, special

programmes, joint professional programmes,

organized by The ICSI-Hyderabad Chapter or and

along with the other Chapters, Regional Councils

and The Institutes in the non- residential delegate

fee.

Two (2) Programme Credit Hours [PCH] for half day

seminars

Four (4) Programme Credit Hours [PCH] for full day

seminar/conference

We would request you to kindly avail the scheme at an

early date. Corporates are requested to opt for multiple

registrations under the scheme.

Intimation about the programs will be sent to the

members by the robust e-mail/ SMS system well in

advance and the person concerned shall have to

confirm his/her attendance 1-2 days before the

programme to enable the Chapter to make appropriate

arrangements.

The fee may be sent by way of D.D. / local cheque drawn

in favour of "Hyderabad Chapter of Company

Secretaries" at the earliest.

Facilities & Benefits

Programme Credit Hours

v

v

v

v

v

v

v

31

Hyderabad Chapter


VOLUNTARY SERVICES EXTENDED BY THE MEMBERS DURING THE MONTH OF March, 2012

Sl.No Name of the Members Nature of the Support/Services Rendered

1 CS P.V. Arun Kumar For coordinating the Chief Guest from BHEL for MSOPInauguration & Investor Awareness Programme at BHEL

2 CS B. Visweswara Rao For coordinating the speaker for MSOP

CS.P Jagannatham For volunteering his services as a Speaker for theCS.A. Satyanarayana Investor Awareness Programme conducted at BHEL

3 CS V. AhaladaRao For his address at Career Awareness Programme at Dichpally.

4 CS S. Chidambaram For his address at one day seminar on Revised Schedule - VI,CARR & CARO

5 CS M. Adinarayana For his address at Half a day workshop on "Intellectual PropertyRights"

6 CS AVNS Nageshwara Rao For his address at one day seminar on Revised Schedule - VI,CARR & CARO

32

THANKS

The Management Committee of Hyderabad Chapter - ICSI places on record

their sincere appreciation for the kind gesture of Mr. CS Sarveswara Reddy

who has contributed Generously LCD Projector for enhancing the

infrastructure facilities to the Oral Coaching Students.

The Management Committee of Hyderabad Chapters also places on records its sincere appreciation to the followingmembers who have contributed books to the library for the benefit of students and members. Their gesture will help thestudents to enriching their knowledge.

1 Romancing the Balance Sheet Anil Lamba CS Vara Lakshmi N

2 Stay hungry stay foolish Rashmi Bansal CS Oruganti Venkata Ravi

3 Seven habits of highly effective people Stephen Covey CS DVM Gopal

4 Born to win Promod Batra CS M S Khan

5 The Professional Subroto Bagchi CS Narender G

6 The Monk who sold his ferrari Robin S Sharma CS R Ramakrishna Gupta

7 Corporate Chanakya Radhakrishnan Pillai CS Vasudeva Rao Devaki

S. No. Books Author By

Hyderabad Chapter


LEGAL JUMBLE-1By CS Nihita Nagajayanti

Company [email protected]

Unscramble these jumbles, One letter to each square to form word realting to our daily professional work.

Now arrange the shaded letters to form the surprise answer as suggested by the above cartoon

Send the answers through email to newsletter committee, Hyderabad chapter stating your name and membership/student registration number before 30th April 2012. Three lucky winners name would be published along with correctanswers in the next edition of the newsletter,

T I U N L O S E E M M O

F O F I L A C I T L E M T A P E

33

Training & Placement Committee has decided to pursue the following goals during the calendar year 2012

1. To strengthen the placement and training system

2. To make Chapter hub of information and also to act as platform for both Employment seekers and Employmentproviders

3. To create proper Awareness amongst the Corporate Community

4. To continuously interact with the decision makers on regular basis

In pursuance to the said goals, the committee has put in efforts to bring out profile with coordinates and brief details of 30MSOP students of 7th batch to circulate among the decision makers and the same will be shortly be circulated among themembers.

A Visweswara Rao Shujath Bin AliChairman ChairmanTraining & Placement Committee Managing Committee

Training & Placement Committee

SUB - COMMITTEE UPDATES

Hyderabad Chapter


TOTAL PROGRAMMES ORGANISEDStudy Circle Ineractive

AFM Meeting Meeting Seminars(1) (3) (3) (3)

1 CS Shujath Bin Ali 1 3 3 3

2 CS R. Ramakrishna Gupta 1 2 2 3

3 CS Vasudeva Rao Devaki 1 3 3 3

4 CS P.G. Issac Raj 1 2 3 3

5 CS P. Chiranjeevulu 1 - 3 1

6 CS S. Kavitha Rani 1 1 - -

7 CS Sudheendhra Putty - 1 - 1

ATTENDANCE OF MC MEMBERS For THE CHAPTER PROGRAMMES (Jan – March, 2012)

34

S.No. Names of the Members M. No.

1 Y.SRINIVAS ARUN A-20760

2 RASHIDA ADANWALA F-4020

3 M.V.RAVI KUMAR A-21030

4 SUBBAIAH RAMAN A-11345

5 FAHIM A SLAM KHAN A-20663

6 Y.RAMESH A-14910

7 MANJUNATH R. HEGDE A-28166

8 M.RAVI A-20084

9 JYOTI KHATRI A-27795

10 K.KOTILINGAM A-17903

11 N.MADHAVI A-16866

12 MALLESHAM K. A-19162

13 K.PUSHPALATHA A-21695

14 G.MAHESH A-19232

15 V.PAVANA SRINIVASA RAO A-20748

16 MADHURI HIMABINDU F-6568

17 TRIVIKRAM DASU A-12039

18 T.KAMALA KUMARI A-21967

19 J.VENKATA KRISHNA A-26172

Members enrolled as Life Members of CSBF during March, 2012

S.No. Names of the Members M. No.

20 M.SUJANI A-12645

21 A.PADMASRI A-13857

22 D.V.GOPINATH F-1241

23 E.RAMAKRISHNA A-19685

24 M.RADHA SUPRIYA A-28588

25 K.DURGADAS A-26789

26 ANKITA MATHUR A-24358

27 A.M.RAMI REDDY F-2147

28 M.SUBRAHMANAM F-4556

29 R.TULASI MAHALAKSHMI A-21206

30 RAJESH SHARMA A-28053

31 B.UMA A-23263

32 K.C.VINOD KUMAR A-20397

33 C.NARESH KUMAR A-6092

34 LALITA SWARUP A. A-21074

35 P.M.PRABHAKAR A-8974

36 J.R.NAGA JAYANTHI A-14429

37 K.V.SOORIA NARAYANA F-3380


CS P. Jagannatham, FormerChairman, SIRC addressing at

Investor Awareness Programme at BHEL on 16 March, 2012.

Sri Datla K M S Raju, Managing Director & CEO of Visista Insurance

Broking Services Pvt Ltd addressing at Study Circle Meeting

on Public liability insurance, Professional Indemnity&

Comprehensive General Liability insurance – Risk Mitigation

perspective on 24 March, 2012

Sri Atul Sobti , General Manager , P&D, S & ES , BHEL, Hyderabad

addressing at MSOP Inauguration on 12 March, 2012.

Sri K. Ramachandra Murthy, Editor-in-Chief, The Hans India , hmtv Addressing addressing at MSOP

valedictory session 29 March, 2012 .

Hyderabad Chapter

Editor: CS R. Ramakrishna Gupta,

CA D.K. Astik , Chief ExecutiveOfficer & Director, I2I IFRS

Management Services Pvt. Ltd at Full Day Seminar on Revised Sch VI

& MCA Updates, CARR & CAROregulations on 27 March, 2012.

CS Shujath Bin Ali, Chairman of the Chapter presenting a memento to

Prof. B. Venkat Rathnam, Vice-Chancellor,Kakatiya University at

MSOP valedictory session 29 March,2012 .

monthly journal - vol.: x issue no. 4 vvv 1/- april, 2012 ... · industries, clients go thru...

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